How we automated a franchisor's monthly MSF invoicing

Month end at a franchise head office usually brings the same job. The franchisees report their revenue, and someone has to work out every management service fee (MSF), raise every invoice, and then set up every payment to collect it.

We recently sat down with a UK franchisor who dreaded this. The work itself was easy. The trouble was that it was repetitive and fiddly, and a single typo meant charging a franchisee the wrong amount.

The monthly routine nobody wanted

The process looked simple on paper, but it meant doing the same work twice, in two systems, for every franchisee, every month:

1. Collect each franchisee's reported revenue for the month.
2. Apply the agreed MSF rate to each franchisee's revenue, then add VAT.
3. Create an invoice in Xero for each franchisee, typing in the amount by hand.
4. Go into GoCardless and create a matching payment for each franchisee, typing the same amount in again.

None of these steps needs judgement; they are pure rules. Done by hand, though, they carried the usual risks of manual admin. Every amount was typed twice, once in Xero and once in GoCardless, which meant two chances to get it wrong and nothing to stop the figures drifting apart. The work landed at month end, when the team was already at its busiest. The routine also lived with whoever usually did it, so when that person was away it either waited or fell to someone less familiar with the rules. And every new franchisee added another calculation, another invoice and another payment, so the job grew with the network.

There is a relationship cost too. A franchisee charged the wrong amount by direct debit rarely thinks "admin error". They think head office does not have its act together. Getting fees right every month is part of how a franchisor earns trust.

Map it before you automate it

Before building anything, we sat down with the team and mapped the process as it really ran. That meant answering a handful of plain questions:

• Where does each franchisee's revenue figure come from, and when is it reported?
• What are the MSF rules? Is the rate the same for everyone, or agreed per franchisee?
• How is VAT applied?
• Who needs to check the numbers before anything is sent, and what are they looking for?
• When should payments be collected?

This is the thinking behind our Blueprint Day: once the process is clear and written down, the automation is easy to see. The mapping also settled the biggest design decision in the project, which was where a person should stay in the loop.

What we built

The new process has four steps, and a person is involved in only one of them.

1. Reported revenue lands in monday.com

All of the franchisees' reported revenues are gathered in one place on monday.com. Head office has one view of what every franchisee reported for the month, and a record of what is still outstanding.

2. The MSF is calculated automatically

For each franchisee, the system applies their MSF rate to their reported revenue. The rules that used to sit in someone's head are now written into the system, where anyone can see them and they apply the same way each month.

3. Draft invoices are created in Xero

Automated integrations built and maintained by Inflowstructure take those amounts and create an invoice in Xero for each franchisee, filling in the fields someone used to type by hand:

• Contact: each invoice is assigned to the right franchisee's contact in Xero, so it is addressed correctly and sits against that franchisee's history.
• Amount: the MSF calculated in monday.com, carried straight across.
• Description: a clear line description, so the franchisee can see what they are being charged for and which period it covers.
• Account: each line is coded to the right account in Xero. That account carries the correct tax rate, so Xero applies the VAT itself, the same way every month.

The invoices are created as drafts, so nothing reaches a franchisee yet. This is where the person comes in: the finance team opens Xero, reviews the drafts and approves them. An afternoon of building invoices from scratch has become a check of work that is already done.

4. GoCardless collects the payment automatically

We did not need to build anything for collection. Xero and GoCardless have a built-in integration, so we connected the two. Once a franchisee has authorised GoCardless, it collects payment for their approved Xero invoices on the due date, and Xero marks each invoice as paid when the money comes in.

That removes the double entry. Nobody creates a payment by hand in GoCardless any more, and the collected amount always matches the invoice, because the invoice drives the collection.

Why keep a review step?

The system could approve and send the invoices on its own, and we chose not to let it. Fees are money leaving a franchisee's bank account. If a franchisee reports a wrong figure, or something unusual happened that month, a person should see it before a direct debit goes out. The review takes a few minutes; a wrong collection means a phone call, a refund and some lost goodwill.

Automate the work. Keep the judgement.

We apply the same rule to most of what we build. The system handles the repetitive, rule-based part consistently, and a person does what people are good at, which is noticing when something looks wrong.

What changed

Month end now looks like this. The team sees every franchisee's reported revenue in one place on monday.com, reviews draft invoices that are already addressed, calculated and coded with VAT applied, approves them in Xero, and lets GoCardless collect each payment on the due date.

The MSF rules, and the VAT through the account coding, now apply the same way every month, whoever runs the process. Revenue lives in monday.com, invoices live in Xero, and the invoices drive the collections, so nothing has to be kept in sync by hand. Adding a franchisee no longer adds a monthly chore either; the system treats one franchisee the same as a hundred.

Could this work for your network?

It is likely to fit if most of these sound familiar:

• You charge franchisees a fee calculated from the revenue they report.
• You invoice through Xero.
• You collect, or would like to collect, by direct debit.
• Month end involves someone copying figures from one place into another.

The same approach works for other recurring charges worked out from reported figures. It also applies outside franchising: if someone is retyping numbers from one system into another, the systems can usually be connected, with a person still making the final check.

If month end still means an afternoon in Xero and GoCardless, we're happy to have a chat.